Why BSEC revoked its Tk200cr fundraising consent for Alif Industries
Alif Industries had planned to raise funds to revive and repay the loans of C&A Textile
The Bangladesh Securities and Exchange Commission (BSEC) revoked its earlier approval for Alif Industries to raise Tk200 crore through issuing fresh shares, four months after the initial consent was granted.
The commission took the decision during a meeting on Tuesday.
Alif Industries, a concern of Alif Group, had planned to raise funds to revive and repay the loans of C&A Textile, a non-operational publicly listed company that Alif Group acquired in 2021.
The funds were to be raised through issuing fresh shares to existing directors, including the company's chairman and managing director (MD). As per the plan, Alif Industries would have merged C&A Textile with it and paid off the loans.
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However, Alif Industries failed to raise the required funds within the three-month deadline provided by the BSEC. As a result, the company sought an extension, which the commission declined, leading to the cancellation of the capital-raising consent, according to a press release of the BSEC.
The share issuance plan
The BSEC had initially approved this plan on 8 April through a consent letter, allowing the company to issue 9.90 crore new shares at Tk22 each, including a Tk12 premium over the face value of Tk10 per share.
The funds raised were intended to pay off over Tk200 crore in loans owed by C&A Textile to various banks, according to company officials.
The consent letter stated that the new shares would be issued to only existing directors namely Md Azizul Islam, chairman of Alif Industries, Md Azimul Islam, managing director of Alif Industries, Lubna Islam and Alif Apparels Limited in cash consideration.
All the money raised against the allotment of shares shall be deposited in separate bank accounts, with amounts over Tk5 lakh to be paid through account payee cheques or payment orders.
Additionally, the new shares would be locked in for three years from the date of allotment shares, the letter reads.
About the C&A Textile
C&A Textile has been inactive since 2017. After being acquired by Alif Group in 2021, the new management planned to merge the company with Alif Industries.
However, C&A Textile's sponsor-directors currently hold only 22.14% of its shares, falling short of the 30% minimum shareholding required by the BSEC. The planned share issuance would have helped the sponsor-directors meet this requirement.
The C&A Textile's paid-up capital is Tk239.31 crore.
Alif Industries had also previously considered issuing a Tk300 crore convertible bond, which was to be subscribed by institutional investors through private placements, to fund its business expansion, repay loans, acquire C&A Textile, purchase machinery, and meet working capital requirements.
However, due to economic uncertainties and liquidity issues, the bond was left unsubscribed.
About Alif Industries
Alif Industries, previously known as Sajib Knitwear and Garments Ltd, was listed on the stock exchanges in 1995.
In 2007, the company got delisted from the mainboard of the bourses, and then returned to the mainboard in 2017.
In FY23, Alif Industries made a profit of Tk7.96 crore, and paid a 17% cash dividend its shareholders. In the first nine months of the 2023-24 fiscal, it made a profit of Tk8.27 crore.
On Wednesday, its share price closed at Tk95.40 each on the Dhaka Stock Exchange (DSE).
